New and rich panel data for a large and representative sample of firms are used to estimate the sensitivity of access to capital to differing ownership structures. The investment behaviour of firms is examined in a dynamic setting in the presence of adjustment costs, liquidity constraints and imperfect competition. The empirical work is based on the derivation of Euler equations in the presence of symmetric and quadratic adjustment costs and both debt and equity constraints. Whereas the norm is to use ad hoc approaches to model these constraints, our alternative and more consistent leads to the inclusion of financial variables in investment equation in first differences rather than in levels. Our GMM estimates confirm the importance of financial factors in determining investment rates and suggest that firms owned by insiders, especially non-managerial employees, are more prone to be liquidity constrained than are others. Among the other groups, somewhat surprisingly, only domestic outsider owned firms display sensitivity to both measures of the availability of finance, with manager owned firms being sensitive to the availability of external finance, while state owned firms being sensitive to the availability of internal finance. Corporate Investment, Corporate Governance, Adjustment Costs, Liquidity Constraints, GMM Estimates, Transition Economies.

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This paper investigates the importance of sunk costs, firm characteristics and spillovers from nearby exporters on a firm’s export participation decision. The empirical analysis involves the estimation of a non-structural, discrete choice, dynamic model with firm heterogeneity. The results suggest that both sunk costs and observable firm characteristics are important determinants of export market participation. In addition, previous history matters, in that, if a firm has been exporting the last period or the period before that it significantly increases the likelihood of the firm exporting in the current period. This conclusion is robust across all specifications. Also, larger firms with high capital intensity and foreign owned are more likely be exporters. Finally, while there is no clear evidence on export spillovers, if a firm operates in an export-oriented industry increases the likelihood of exporting. Dynamic Panel, sunk costs, export decision.

We analyze the impact of corporate governance structures on access to capital using a unique and rich panel data for a large and representative sample of Estonian firms over the period 1993 through 1999. We distinguish among five different governance structures and provide estimates on the impact of each of them on capital constraints. Our results indicate that: (i) separate regimes exist in investment behavior; (ii) the likelihood of being financially constrained is higher in firms that are recently privatized, small and where ownership is concentrated in the hands of insiders; (iii) soft budget constraints lower the probability of a firm being financially constrained; (iv) the actual probabilities of operating in the financially constrained regime are calculated to be quite high and essentially stable during 1993-1999: 0.52-0.57 for state owned firms, 0.40-0.46 for domestic owned firms and 0.53-0.57 for employee owned firms. Corporate Investment, Corporate Governance, Liquidity Constraints, GMM Estimates, Switching Regression.

Unlike previous empirical work in analyzing investment behavior and the determinants of liquidity constraints, we use a switching regression framework when sample separation is unknown and endogenous and firms are assumed to operate either in the financially constrained or in the financially unconstrained regime. The actual regime the firm is in is determined by a switching or selection function, which depends on those variables that theoretically determine the wedge between internal and external finance, the severity of information and agency problems and time-varying firm characteristics. By using new panel data for Estonian companies during 1993 through 1999 we find that: (i) separate regimes exist in investment behavior; (ii) the likelihood of being financially constrained is higher in firms that are recently privatized, small and where ownership is concentrated in the hands of insiders and the state; (iii) soft budget constraints lower the probability of a firm being financially constrained; (iv) the actual probabilities of operating in the financially constrained regime are calculated to be quite high and essentially stable during 1993-1999: 0.52-0.57 for state owned firms, 0.40-0.46 for domestic owned firms and 0.53-0.57 for employee owned firms; (v) ownership structure affects investment beyond its indirect effects through financial constraints. Corporate Investment, Liquidity Constraints, Insider Ownership, Switching Regression, Soft Budget Constraint.

Using a sample of 603 subsidiaries Chinese Multinational Corporations (MNCs) and 174 subsidiaries Indian MNCs, we explore the regional and industrial pattern of their direct investment strategies. Our analysis reveals several important facts. First, most of outward foeign direct investment (FDI) is directed in finance and real estate and services. Second, by far the majority of investment projects are carried out in the home region of Asia-Pacific. Third, outward FDI is highly concentrated geographically and the average investment project is relatively small. Fourth, establishment of subsidiaries is the most preferred way of carrying out FDI. Finally, firm-specific and location-specific characteristics are important drivers of FDI strategies. Last but not least, a large proportion of Chinese and Indian investments is conducted mainly within those countries themselves, revealing a strong multi- domestic character. Outward Foreign Direct Investment, Chinese Multinational Corporations, Indian Multinational Corporations, Market Seeking, Resource Seeking, Efficiency Seeking, Risk Diversification